The European Commission has approved a €4 billion French scheme to support measures aiming at reducing greenhouse gas emissions in the manufacturing sector and help it transition towards a net-zero economy, in line with the Green Deal Industrial Plan. The scheme was approved under the State aid Temporary Crisis and Transition Framework, adopted by the Commission on 9 March 2023 and amended on 20 November 2023 and on 2 May 2024.
The French measure
France notified to the Commission, under the Temporary Crisis and Transition Framework, a €4 billion scheme to support (i) investments in electrification of industrial processes and (ii) investments in energy efficiency, to foster the transition to a net-zero economy.
Under this measure, the aid will take the form of direct grants amounting to up to 30% of the project's investment costs. The measure will be open to companies active in the manufacturing sector in France. Eligible electrification projects must lead to a reduction of greenhouse gas emissions from industrial processes of at least 40% compared to today, while energy efficiency projects must lead to a reduction in the energy consumed in industrial processes of at least 20% compared to today. For investments relating to activities covered by the EU Emission Trading System ('ETS'), the emissions reduction must go below the relevant ETS benchmarks in force at the time of granting the aid.
The Commission found that the French scheme is in line with the conditions set out in the Temporary Crisis and Transition Framework. In particular, (i) the aid per beneficiary will not exceed 10% of the total budget (i.e. €400 million); and (ii) it will be granted until no later than 31 December 2025. Furthermore, the aid will be subject to conditions to ensure actual emissions savings. The investments must be completed within 36 months after the aid has been granted.
In addition, the public support will come subject to conditions to limit undue distortions of competition. In particular, the aid must not enable the beneficiaries to increase their production capacity beyond 2% compared to today.
The Commission concluded that the French scheme is necessary, appropriate and proportionate to accelerate the green transition and facilitate the development of certain economic activities, which are of importance for the implementation of the REPower EU Plan and the Green Deal Industrial Plan, in line with Article 107(3)(c) TFEU and the conditions set out in the Temporary Crisis and Transition Framework.
On this basis, the Commission approved the aid measure under EU State aid rules.
Background
On 9 March 2023, the Commission adopted a new Temporary Crisis and Transition Framework to foster support measures in sectors which are key for the transition to a net-zero economy, in line with the Green Deal Industrial Plan. The Framework amends and prolongs in part the Temporary Crisis Framework, adopted on 23 March 2022, to enable Member States to use the flexibility foreseen under State aid rules to support the economy in the context of Russia's war against Ukraine.
The Temporary Crisis and Transition Framework has been amended on 20 November 2023 and on 2 May 2024 to prolong a limited number of sections aimed at providing a crisis response following Russia's aggression against Ukraine and the unprecedented increase in energy prices.
The Temporary Crisis and Transition Framework, in its current form, provides for the following types of aid, which can be granted by Member States:
- Limited amounts of aid (section 2.1), in any form up to €280,000 per company active in the primary agriculture sector, and €335,000 for companies active in fisheries or aquaculture until 31 December 2024, and up to €2.25 million in all other sectors until 30 June 2024;
